If inflation comes in below economists’ expectations, a can be postponed. The Producer Price Index () and the Consumer Price Index () will be announced on September 10th and 11th. Economists are expecting that both the PPI and CPI will rise 0.4% in August. The core PPI, excluding food and energy, is expected to rise 0.3%, while the core CPI is expected to rise 0.2%.
September is normally a seasonally weak month due to investors predominantly having to raise capital for estimated tax payments on September 15th, but the second half of September is seasonally stronger. Our fundamentally superior stocks normally benefit from the quarter-end window dressing in late September, so if you have more capital to invest, the last two weeks of September would be a great time to add money.
The outlook for economic growth in the eurozone is now grim. The eurozone announced that retail sales declined 0.6% in July, which was substantially below economists’ consensus expectation of a 0.3% increase. Germany’s retail sales plunged 3.4% in July, while Spain’s retail sales dropped 0.9%. Spain was previously the hottest economy in the eurozone.
As the mid-term elections approach in the U.S., the political chaos in Germany and Spain is demonstrating that “it is the economy, stupid” as far as many voters are concerned. President Trump recently sent a delegation to Russia to try to unwind the war with Ukraine, so clearly the Trump Administration is looking to resolve global problems. When Chinese President Xi visits the White House on September 24th, the Trump Administration is striving for China to reiterate that Iran stop interfering with the Strait of Hormuz. Crude oil prices should be moderating in the upcoming weeks as worldwide seasonal demand ebbs and crude oil tanker transit increases through the Strait of Hormuz.
In the meantime, the U.S. Navy’s blockade since mid-July has been very effective. According to ship tracker Kpler, no Iranian crude oil has passed through the naval blockade. Furthermore, the U.S. struck three Iranian crude oil tankers after missiles were fired at the U.S. Navy. These attacks caused crude oil prices to temporarily spike. Despite these military actions, the war between Iran and the U.S. has evolved into an economic war as Treasury Secretary Bessent imposes a monetary squeeze on Iran.